The Swiss Mean Business

When it comes to preventing counterfeits, it seems that the Swiss mean business. In particular, Vacheron Constantine's new watch called the Quai de l'Ile is meant to illustrate this. The Swiss watchmaker claims that is has created a watch that will be impossible to counterfeit. The company insists that by using technology such as invisible UV marking, laser perforations of certain of the watch's parts, and high security inks used in important goverment issued items such as passports and currency all make it highly unlikely that a counterfeit of the watch can be made.

Here are some interesting statistics about counterfeit luxury watches: "The Swiss Customs Service has estimated that as many as 40 million counterfeit watches are put into circulation each year. Switzerland last year exported only about 26 million watches, so there's a fairly reasonable chance that the expensive-looking watch on your neighbor's wrist could be a fake.
Watchmakers have long fought counterfeiters by adding special stickers and limiting supply through authorized dealers. Rolex -- probably the most faked watch of all time -- strictly controls the numbers of its watches that can be sold by a dealer and requires that all repairs be made with authorized parts. Rolex also puts a green hologram sticker on the back of its watches -- though counterfeiters forge that, too." (http://online.wsj.com/article/SB122411896958338969.html?mod=article-outset-box)

Swiss legislation has gotten tougher. It requires that any counterfeit watch confiscated at its borders be destroyed.

The watch was a collaboration between the company's CEO and the Swiss Passport artist Mr. Roger Pfund. Such a collaboration allowed the company to have access to security inks that are used on currency and passports. This access was granted courtesy of Orell Füssli Security Printing, a Zurich firm that prints bank notes and Swiss passports.

It seems that all of these security measures are a kind of challenge to all counterfeiters out there to make a quality knockoff, but given that the company is planning to only sell 800 of these watches, any smart consumer can quickly figure out if what they are beholding is the real deal or a fake. The watch will sell between $29,000 to $60,000 and can be customized according to the consumer's preference. There can be up to 400 different varieties of the watch.

According to the company's CEO Juan-Carlos Torres, . "You have to secure a person's investment," he says. "It's our responsibility."

Given that there is a recession looming over our heads, is this a smart investment? I would say no. Why? Well paying that much for a Swiss watch just because it can't be counterfeited just seems plain silly. It also reeks of excess that is in poor taste at the moment. A company's responsibility is to provide a quality product that is protected by tougher legislation in the spirit of protecting the consumer. This just seems like a protection of snob appeal. I don't see any responsibility being shown by Vacheron with such a product launch.

Woody Allen vs. American Apparel? Oy Vey!

So back in April 2008, Woody Allen decided to sue American Apparel's Dov Charney for "misappropriation and commercial use of his image" in order to sell products by the company. Apparently the photo is a still shot from the famous Woody Allen film Annie Hall. Annie's grandmother envisions her grand daughter's hipster boyfriend as a Hassidic rabbi. The Hebrew written at the top says "Our spiritual leader" or something to this effect.

Here is a quickie lesson about misappropriation in case you fell asleep during your Unfair Competition Class: It is a claim that is meant to protect the commercial value of a person's image when it is appropriated for advertising or trade purposes. Courts have held that this right does not override the right to freedom of press and freedom of speech though. Expressive and newsworthy publications are exempt from these types of claims if the outlets are deemed to be in the public's best interest and the images are used in furtherance of such public interest.

As you can tell, it seems like American Apparel will have a lot of explaining to do since they are using Mr. Allen's image for commercial purposes without informing him and without compensating him either.

According to Women's Wear Daily, the papers filed in federal court in Manhattan indicate that the judge has ruled that the case is not eligible for mediation. While a trial date has not been set, this new ruling indicates that the court may rule favorably for Mr. Allen with regards to his case. It will be interesting to see what happens with this case. If this is in favor of Mr. Allen, will other celebrities follow suit?

Counterfeit ≠ Luxe

Contrary to my theory that the demand for fakes will wane as this economy takes a turn for the worse, a group of six individuals in Florida have proven me wrong. These six individuals were involved in trafficking counterfeit luxury goods. All of the individuals are Jacksonville, FLA residents.

They were indicted by a federal grand jury and can each face a maximum sentence of ten years in prison as well as a fine worth over $2 million. They are alleged to have sold goods bearing the trademarks of brands such as Chanel, Gucci, and Louis Vuitton. (http://www.wwd.com/business-news/legal-briefs-1844081?gnewsid=2e7d59217966e95a399bc884623c36b5).

Footwear News Talks About Fakes

Footwear News (one of my favorite trade publications) has done an interesting article about counterfeits, fakes, knockoffs and other harmful items in the fashion industry. Some of the statistics from the article were definitely an indicator that these items are not going away and that this problem needs to be addressed:

"According to U.S. Customs, for the first half of the fiscal year started Oct. 1, 2007, 36 percent of all intellectual property rights seizures was footwear, worth an estimated $40.3 million. Of those seizures, 96 percent came from China. For all of fiscal 2007, 40 percent of the seizures was footwear, up from $63.4 million in 2006 to $78 million.

While counterfeiters are getting craftier, customs officials are working diligently to catch counterfeit goods before they hit the streets. Earlier this month, officials announced at a news conference held by Todd Hoffman, U.S. Customs director at the Los Angeles-Long Beach Seaport, that the agency had a record-breaking year of increases in seized goods. There was a 50 percent rise in seizures over fiscal-year 2007, an increase in value of 148 percent. The Los Angeles-Long Beach customs office seized 357 shipments of counterfeit and pirated goods, with a domestic value of $71.4 million. According to the International Anticounterfeiting Coalition, counterfeiting costs U.S. businesses $200 billion to $250 billion annually and is directly responsible for the loss of more than 750,000 American jobs.

Among the factors that the agency said contributed to the record seizures were new partnerships formed among several agencies, including Immigration and Customs Enforcement, the Food and Drug Administration and the Consumer Product Safety Commission. Additionally, a joint working group was created between Customs and Border Patrol and Immigration and Customs Enforcement.Recently, Footwear News spoke with David Brener, a 22-year customs veteran and the chief intellectual property rights operations branch officer in Washington, D.C., about the state of counterfeiting and what is being done to combat the problem."

A loss of 750,000 American jobs? If you want to read more of this article, I encourage that you check out the FN website link: http://www.footwearnews.com/site/article.php?id=1576

Sour Economy = A Drop in Fakes?

With the economy in dire straits, how will the fashion world fare? There are people who would posit that there will be a rise in the demand for fake luxury goods, but I am going to go against the grain and posit that the economy will actually force consumers to look for "recession proof" items. Recession proof items are typically not as logo oriented and focus more on quality materials and craftsmanship. If a consumer can only afford to purchase one luxury item, that consumer will make sure that there is no obvious logo pattern and that the item can stand the test of time. There will also be a tendency to pick "safer" colors such as basic black, camel, or classic red. This is actually how the French approach fashion. The French will purchase a few well made pieces from famous design houses and wear those pieces daily. Since the trend with fakes tends to be towards "trendy" pieces that are logo heavy, it seems that this shift towards the classics will bring about a drop in fakes.

In the meantime, the fashion industry is fearing the complete opposite. Here is a website that is devoted to anti-piracy measures in the fashion industry: http://www.bazaarelite.com/fakes.asp
I appreciate the efforts, but I do believe that the demands for fakes will be going down. We are definitely heading for a fashion industry that is less about excess and more about endurance. While I find Isaac Mizrahi's recession fashion advice to be a little on the ridiculous side (http://themoment.blogs.nytimes.com/2008/10/09/isaac-mizrahis-luxury-guide-to-recession-style/?WT.mc_id=TM-D-I-NYT-MOD-MOD-M065-ROS-1008-L1&WT.mc_ev=click&mkt=TM-D-I-NYT-MOD-MOD-M065-ROS-1008-L1) he does have a point about investing in quality versus quantity. I agree with Diane Von Furstenberg in her efforts to protect designers, but perhaps designers should think about versioning. This is exactly what Mr. Mizrahi does at Target. He makes affordable clothing that reflects the high runway style in his more expensive lines. I recommend that buyers who are interested in fakes to start looking at more affordable luxury lines that are legitimate. When you buy a fake, it does not do anything but make you look bad. The quality of the craftsmanship does not last, the item becomes dated and you are left with something you stick in the back of your closet. Good luck to us all.